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EXHIBIT (d).12
SUBADVISORY AGREEMENT
This Subadvisory Agreement (this "Agreement") is entered into as of the
13th day of April, 2000, by and between Fortis Advisers, Inc., a corporation
(the "Adviser") and Federated Investment Management Company, a Delaware
business trust ("FIM").
RECITALS:
A. The Adviser has entered into an advisory agreement dated March 3, 2000,
(the "Advisory Agreement") with Fortis Series Fund, Inc., a Minnesota
corporation (the "Company"), pursuant to which the Adviser provides
portfolio management services to the series of the Company set forth on
Schedule 1 to this Agreement (each a "Fund" and collectively the "Funds");
B. The Advisory Agreement provides that the Adviser may delegate any or all
of its portfolio management responsibilities under the Advisory Agreement
to one or more subadvisers; and
C. The Adviser and the Board of Directors (the "Board") of the Company
desire to retain FIM to render portfolio management services in the manner
and on the terms set forth in this Agreement.
AGREEMENT:
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth in this Agreement, the Adviser and FIM agree as follows:
SECTION 1. APPOINTMENT OF SUBADVISER.
The Adviser hereby appoints FIM as subadviser for each Fund and authorizes
FIM, in its discretion and without prior consultation with the Adviser, to
invest and manage each Fund's portfolio of Securities in accordance with such
Fund's stated investment objective to the fullest extent permitted by:
(a) the Fund's investment policies, limitations, procedures and
guidelines set forth in the documents listed on Schedules 2 and 3 to
this Agreement;
(b) any additional objectives, policies or guidelines established
by the Adviser or by the Board that have been furnished in writing
to FIM;
(c) the provisions of the Investment Company Act of 1940 (the
"1940 Act") and the rules and regulations thereunder applicable to
the Fund; and
(d) the provisions of Subchapter M of the Internal Revenue Code
("IRC") applicable to "regulated investment companies."
For purposes of this Agreement, "Securities" include any investment
permitted under the foregoing policies, limitations, procedures, guidelines,
laws or regulations. Subject to the supervision of the Adviser and the Board,
the Adviser authorizes FIM to determine the structure and composition of the
Fund's portfolio, including the purchase, retention and disposition of, and
exercise of all rights pertaining to, the Securities comprising the portfolio.
SECTION 2. REPRESENTATIONS AND WARRANTIES.
SECTION 2.1. REPRESENTATIONS AND WARRANTIES OF FIM
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FIM represents and warrants to Adviser as follows:
(a) FIM is a business trust duly organized, validly existing, and in good
standing under the laws of the State of Delaware.
(b) This Agreement constitutes the legal, valid, and binding obligation of FIM,
enforceable against FIM in accordance with its terms. FIM has the absolute
and unrestricted right, power, and authority to execute and deliver this
and to perform its obligations under this Agreement.
(c) Neither the execution and delivery of this Agreement by FIM nor the
performance of any of its obligations hereunder will give any person the
right to prevent, delay, or otherwise interfere with the performance of
such obligations pursuant to:
(i) any provision of FIM's Declaration of Trust or By-Laws;
(ii) any resolution adopted by the board of trustees or the shareholders of
FIM;
(iii) any law, regulation or administrative or court order to which FIM may
be subject; or
(iv) any contract to which FIM is a party or by which FIM may be bound.
FIM is not and will not be required to obtain any consent from any person
in connection with the execution and delivery of this Agreement or the
performance of any obligations hereunder.
(d) FIM is registered with the Securities and Exchange Commission ("SEC") as
an investment adviser under the Investment Advisers Act of 1940 (the
"Advisers Act") and is registered or licensed as an investment adviser
under the laws of all jurisdictions in which its activities require it to
be so registered or licensed, except where the failure to be so licensed
would not have a material adverse effect on its business.
(e) FIM has furnished to the Adviser true and complete copies of all the
documents listed on Schedule 3 to this Agreement.
SECTION 2.2. REPRESENTATIONS AND WARRANTIES OF THE ADVISER
The Adviser represents and warrants to FIM as follows:
(a) The Adviser is a corporation duly organized, validly existing, and in
good standing under the laws of the State of Minnesota.
(b) This Agreement constitutes the legal, valid, and binding obligation of
the Adviser, enforceable against the Adviser in accordance with its terms.
the Adviser has the absolute and unrestricted right, power, and authority
to execute and deliver this and to perform its obligations under this
Agreement.
(c) Neither the execution and delivery of this Agreement by the Adviser nor
the performance of any of its obligations hereunder will give any person
the right to prevent, delay, or otherwise interfere with the performance
of such obligations pursuant to:
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(i) any provision of the Adviser's Articles of Incorporation or By-Laws;
(ii) any resolution adopted by the board of directors or the shareholders
of the Adviser;
(iii) any law, regulation or administrative or court order to which the
Adviser may be subject; or
(iv) any contract to which the Adviser is a party or by which the Adviser
may be bound.
Except for the approval of the Board and of each Fund's shareholders as
required by Section 15 of the 1940 Act, the Adviser is not and will not
be required to obtain any consent from any person in connection with the
execution and delivery of this Agreement or the performance of any
obligations hereunder.
(d) The Adviser is registered with the SEC as an investment adviser under the
Advisers Act and is registered or licensed as an investment adviser under
the laws of all jurisdictions in which its activities require it to be so
registered or licensed, except where the failure to be so licensed would
not have a material adverse effect on its business.
(e) The Adviser has furnished to FIM true and complete copies of all the
documents listed on Schedule 2 to this Agreement.
SECTION 3. CONDITIONS TO AGREEMENT.
FIM's and the Adviser's obligations under this Agreement are subject to
the satisfaction of the following conditions precedent:
(a) Receipt by FIM of a certificate of an officer of Company stating that (i)
this Agreement and the Advisory Agreement have been approved by the vote
of a majority of the directors, who are not interested persons of FIM or
the Adviser, cast in person at a meeting of the Board call for the purpose
of voting on such approval, and (ii) this Agreement and the Advisory
Agreement have been approved by the vote of a majority of the outstanding
voting securities of the Company;
(b) Receipt by FIM of certified copies of instructions from the Fund to its
custodian designating the persons specified by FIM as "Authorized Persons"
under the Fund's custody agreement;
(c) The Fund's execution and delivery of a limited power of attorney in favor
of FIM, in a form mutually agreeable to FIM, the Adviser and the Board;
(d) Receipt by FIM of Board resolutions, certified by an officer of the
Company, adopting all procedures and guidelines listed on Schedule 3 to
this Agreement and identified as required by Rule 2a-7 or any other
exemptive rule or order that is or will become applicable to any Fund;
(e) Receipt by FIM of complete copies, certified by an officer of the
Company, of all other policies procedures, guidelines, and codes listed on
Schedule 2 to this Agreement; and
(f) Any other documents, certificates or other instruments that FIM or the
Adviser may reasonable request from the Fund.
SECTION 4. COMPENSATION.
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For the services provided under this Agreement, the Adviser will pay to
FIM a fee at the annual rate set forth opposite each Fund's name on Schedule 1
multiplied times such Fund's average daily net assets. Such fee will accrue
daily and will be paid monthly to FIM on or before the last business day of the
next succeeding calendar month. If this Agreement is effective for only a
portion of a month, the fee will be prorated for the portion of such month
during which this Agreement is in effect.
SECTION 5. INFORMATION AND REPORTS.
(a) The Adviser will promptly notify FIM of any material change in any of the
documents listed on Schedule 2 to this Agreement and will provide FIM with
copies of any such modified document. The Adviser will also provide FIM
with a list, to the best of the Adviser's knowledge, of all affiliated
persons of Adviser (and any affiliated person of such an affiliated
person) and will promptly update the list whenever the Adviser becomes
aware of any additional affiliated persons.
(b) FIM will maintain books and records relating to its management of the
Fund under its customary procedures and in compliance with applicable
regulations under the 1940 Act and the Advisers Act. FIM will permit the
Adviser to inspect such books and records at all reasonable times during
normal business hours, upon reasonable notice. Prior to each Board
meeting, FIM will provide the Adviser and the Board with reports regarding
its management of the Fund during the interim period, in such form as may
be mutually agreed upon by FIM and the Adviser. FIM will also provide the
Adviser with any information regarding its management of the Fund required
for any shareholder report, amended registration statement or prospectus
supplement filed by the Fund with the SEC.
(c) The Adviser and the Company agree not to refer to any designation
comprised in whole or in part of the names or marks of FIM or any other
trademark relating to FIM in any advertisement or other document without
the prior consent of FIM. Similarly, FIM and its affiliates shall not
refer to the Adviser, the Company, the Fund or other Fortis affiliates in
any advertisement or other document without the Adviser's prior consent.
Upon termination of this Agreement, each party shall cease all use of any
such name or xxxx as soon as reasonably practicable.
SECTION 6. NONEXCLUSIVE AGREEMENT; ALLOCATION OF TRANSACTIONS.
(a) The investment management services provided by FIM hereunder are not to
be deemed to be exclusive, and FIM shall be free to render similar
services to other advisers, investment companies, and other types of
clients.
(b) To the extent consistent with applicable law, FIM may aggregate purchase
or sell orders for the Fund with contemporaneous purchase or sell orders
of other clients of FIM or its affiliated persons. In such event,
allocation of the Securities so purchased or sold, as well as the expenses
incurred in the transaction, will be made by FIM in the manner FIM
considers to be the most equitable and consistent with its and its
affiliates' fiduciary obligations to the Fund and to such other clients.
The Adviser hereby acknowledges that such aggregation of orders may not
result in a more favorable price or lower brokerage commissions in all
instances.
(c) FIM will place purchase and sell orders for the Fund with or through such
banks, brokers, dealers, futures commission merchants or other firms
dealing in Securities ("Brokers") as it determines, which may include
Brokers that are affiliated persons of FIM, provided such orders are
exempt from the provisions of Section 17(a), (d) and (e) of the 1940 Act.
FIM will use its best efforts to obtain execution of transactions for the
Fund at prices which are advantageous to the Fund and at commission rates
that are reasonable in relation to the services received. FIM may,
however, select Brokers on the basis that they provide brokerage, research
or other services or products to the Fund and/or other
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clients of FIM and its affiliated persons. In selecting Brokers in such a
manner, FIM will comply with the provisions of Section 28(e) of the
Securities and Exchange Act of 1934, as amended, and may also consider the
reliability, integrity and financial condition of the Broker, and the size
of and difficulty in executing the order.
SECTION 7. FUND EXPENSES.
Each Fund shall pay or cause to be paid all of its own expenses and its
allocable share of Corporation expenses incurred in managing its portfolio of
Securities, including all commissions, xxxx-ups, transfer fees, registration
fees, ticket charges, transfer taxes, custodian fees and similar expenses. Each
Fund will also pay its allocable share of such extraordinary expenses as may
arise including expenses incurred in connection with litigation, proceedings,
and claims and the legal obligations of the Corporation to indemnify its
officers and Directors and agents with respect thereto. Each Fund will promptly
reimburse FIM for any such expense to the extent advanced by FIM. In no event
will FIM have any obligation to pay any of the Funds' expenses, including
without limitation, the expenses of organizing the Corporation and continuing
its existence; fees and expenses of Directors and officers of the Corporation;
fees for administrative personnel and services; expenses incurred in the
distribution of its shares ("Shares"), including expenses of administrative
support services; fees and expenses of preparing and printing its Registration
Statements under the Securities Act of 1933 and the 1940 Act; expenses of
registering and qualifying the Corporation, the Funds, and Shares of the Funds
under federal and state laws and regulations; expenses of preparing, printing,
and distributing prospectuses (and any amendments thereto) to shareholders;
interest expense, taxes, fees, and commissions of every kind; expenses of issue
(including cost of Share certificates), purchase, repurchase, and redemption of
Shares; charges and expenses of custodians, transfer agents, dividend
disbursing agents, shareholder servicing agents, and registrars; printing and
mailing costs, auditing, accounting, and legal expenses; reports to
shareholders and governmental officers and commissions; expenses of meetings of
Directors and shareholders and proxy solicitations therefor; insurance
expenses; association membership dues and such nonrecurring items as may arise,
including all losses and liabilities incurred in administering the Corporation
and the Funds.
SECTION 8. LIMITATION OF LIABILITY.
(a) In the absence of willful misfeasance, bad faith or gross negligence on
the part of FIM, or of reckless disregard by FIM of its obligations and
duties hereunder, FIM shall not be subject to any liability to the
Adviser, the Fund, the Company, any shareholder of the Fund, or to any
person, firm or organization. Without limiting the foregoing, FIM shall
not have any liability whatsoever for any investment losses incurred by a
Fund, or arising from transactions by a Fund, prior to the date on which
FIM assumes responsibility for the management of the Fund's portfolio.
(b) The Adviser, the Company, and the Fund are hereby expressly put on notice
of the limitation of liability as set forth in the Declaration of Trust of
FIM and agree that the obligations assumed by FIM pursuant to this
Agreement will be limited in any case to FIM and its assets and the
Adviser, the Company, and the Fund shall not seek satisfaction of any such
obligation from the shareholders of FIM, the trustees of FIM, officers,
employees or agents of FIM, or any of them.
SECTION 9. PRICING.
The Adviser, the Company and the Fund hereby acknowledge that FIM is not
responsible for pricing portfolio Securities, and that the Adviser, the
Company, the Fund, and FIM will rely on the pricing agent chosen by the Board
of the Company for prices of Securities, for any purposes. However, in any
instance where the pricing services utilized by the Fund do not provide an
appropriate price for a security
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held by the Fund, FIM will provide the Adviser with reasonable assistance in
determining a price for such security.
SECTION 10. TERM.
This Agreement shall begin as of the date of its execution and shall
continue in effect for a period of two years from the date hereof and
thereafter for successive periods of one year, subject to the provisions for
termination and all of the other terms and conditions hereof if such
continuance is specifically approved at least annually in conformity with the
requirements of the 1940 Act; provided, however, that this Agreement may be
terminated by the Fund at any time, without the payment of any penalty, by the
Board or by vote of a majority of the outstanding voting securities (as defined
in the 0000 Xxx) of the Fund, or by the Adviser or FIM at any time, without the
payment of any penalty, on not more than 60 days' nor less than 30 days'
written notice to the other party. This Agreement will terminate automatically
in the event of its assignment (as defined in the 0000 Xxx) or upon the
termination of the Adviser's management agreement with the Fund.
SECTION 11. LIMITED POWER OF ATTORNEY.
Subject to any other written instructions of the Adviser or the Company,
FIM is hereby appointed the Fund's agent and attorney-in-fact for the limited
purposes of executing account documentation, agreements, contracts and other
documents as FIM shall be requested by brokers, dealers, counter parties and
other persons in connection with its management of the Fund's assets. The
Adviser and the Company hereby ratify and confirm as good and effectual, at law
or in equity, all that FIM and its officers and employees, may do in its
capacity as attorney-in-fact. However, nothing herein shall be construed as
imposing a duty on FIM to act or assume responsibility for any matters in its
capacity as attorney-in-fact for the Fund. Any person, partnership, corporation
or other legal entity dealing with FIM in its capacity as attorney-in-fact
hereunder for the Fund is hereby expressly put on notice that FIM is acting
solely in the capacity as an agent of the Fund and that any such person,
partnership, corporation or other legal entity must look solely to the Fund for
enforcement of any claim against Fund, as FIM assumes no personal liability
whatsoever for obligations of the Fund entered into by FIM in its capacity as
attorney-in-fact for the Fund.
SECTION 12. GENERAL PROVISIONS
SECTION 12.1. Notices
All notices, consents, waivers, and other communications under this
Agreement must be in writing and will be deemed to have been duly given when
(a) delivered by hand (with written confirmation of receipt), (b) sent by
telecopier (with written confirmation of receipt), provided that a copy is
mailed by registered mail, return receipt requested, or (c) when received by
the addressee, if sent by a nationally recognized overnight delivery service
(receipt requested), in each case to the appropriate addresses and telecopier
numbers set forth below (or to such other addresses and telecopier numbers as a
party may designate by notice to the other parties):
FIM: Federated Investment Management Company
0000 Xxxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000-0000
Attention: Xxxxx Xxxxxxxx
Facsimile No.: (000) 000-0000
Adviser: Fortis Advisers, Inc.
000 Xxxxxxxxxx Xxxxx
0
Xxxxxxxx, XX 00000
Attention: Legal Department
Facsimile No.: (000) 000-0000
SECTION 12.2. Further Assurances
The parties agree (a) to furnish upon request to each other such further
information, (b) to execute and deliver to each other such other documents, and
(c) to do such other acts and things, all as the other party may reasonably
request for the purpose of carrying out the intent of this Agreement and the
documents referred to in this Agreement.
SECTION 12.3. Waiver
The rights and remedies of the parties to this Agreement are cumulative
and not alternative. Neither the failure nor any delay by any party in
exercising any right, power, or privilege under this Agreement or the documents
referred to in this Agreement will operate as a waiver of such right, power, or
privilege, and no single or partial exercise of any such right, power, or
privilege will preclude any other or further exercise of such right, power, or
privilege or the exercise of any other right, power, or privilege. To the
maximum extent permitted by applicable law, (a) no claim or right arising out
of this Agreement or the documents referred to in this Agreement can be
discharged by one party, in whole or in part, by a waiver or renunciation of
the claim or right unless in writing signed by the other party; (b) no waiver
that may be given by a party will be applicable except in the specific instance
for which it is given; and (c) no notice to or demand on one party will be
deemed to be a waiver of any obligation of such party or of the right of the
party giving such notice or demand to take further action without notice or
demand as provided in this Agreement or the documents referred to in this
Agreement.
SECTION 12.4. Entire Agreement and Modification
This Agreement supersedes all prior agreements between the parties with
respect to its subject matter and constitutes (along with the documents
referred to in this Agreement) a complete and exclusive statement of the terms
of the agreement between the parties with respect to its subject matter. This
Agreement may not be amended except by a written agreement executed by the
party to be charged with the amendment.
SECTION 12.5. Assignments, Successors, and No Third-Party Rights
Neither party may assign any of its rights under this Agreement without
the prior consent of the other parties. Subject to the preceding sentence, this
Agreement will apply to, be binding in all respects upon, and inure to the
benefit of the successors and permitted assigns of the parties. Nothing
expressed or referred to in this Agreement will be construed to give any person
other than the parties to this Agreement any legal or equitable right, remedy,
or claim under or with respect to this Agreement or any provision of this
Agreement. This Agreement and all of its provisions and conditions are for the
sole and exclusive benefit of the parties to this Agreement and their
successors and assigns.
SECTION 12.6. Severability
If any provision of this Agreement is held invalid or unenforceable by any
court of competent jurisdiction, the other provisions of this Agreement will
remain in full force and effect. Any provision of this Agreement held invalid
or unenforceable only in part or degree will remain in full force and effect to
the extent not held invalid or unenforceable.
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SECTION 12.7. Section Headings, Construction
The headings of Sections in this Agreement are provided for convenience
only and will not affect its construction or interpretation. All references to
"Section" or "Sections" refer to the corresponding Section or Sections of this
Agreement. All words used in this Agreement will be construed to be of such
gender or number as the circumstances require. Unless otherwise expressly
provided, the word "including" does not limit the preceding words or terms.
SECTION 12.8. Governing Law
To the extent that state law is not preempted by the provisions of any law
of the United States, heretofore or hereafter enacted, as the same may be
amended from time to time, this Agreement will be governed by the laws of the
State of Pennsylvania without regard to conflicts of laws principles.
SECTION 12.9. Counterparts
This Agreement may be executed in one or more counterparts, each of which
will be deemed to be an original copy of this Agreement and all of which, when
taken together, will be deemed to constitute one and the same agreement.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
signed on their behalf by their duly authorized officers as of the date first
above written.
FEDERATED INVESTMENT MANAGEMENT COMPANY
By: J. Xxxxxxxxxxx Xxxxxxx
----------------------
Name: J. Xxxxxxxxxxx Xxxxxxx
Title: President
FORTIS ADVISERS, INC.
By: Xxxxxx X. Xxxxxx
----------------
Name: Xxxxxx X. Xxxxxx
Title: Vice President
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SCHEDULE 1 - FUNDS AND SUBADVISORY FEES
Name of Series Subadvisory Fee
-------------- ---------------
American Leaders Series For the first $35 million .50%
$35 million - $100 million .35%
For assets over $100 million .25%
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SCHEDULE 2 - FUND DOCUMENTATION
1. Company's Articles of Incorporation and Bylaws.
2. Currently effective registration statement for each class of each Fund's
shares and any pending amendments to such registration statement.
3. Any supplements to any prospectus or statement of additional information
for any class of any Fund's shares.
4. Custody Agreement between the Trust and U.S. Bank National Association,
as Custodian for the Portfolio's securities, including information as to:
o the Portfolio's nominee,
o the Federal tax identification numbers of the Portfolio and its
nominee,
o all routing, bank, participant and account numbers and other
information necessary to provide proper instructions for transfer and
delivery of Securities to the Portfolio's accounts at the Custodian,
o the name, address, phone and fax number of the Custodian's employees
responsible for the Portfolio's accounts, and
o the Portfolio's pricing service and contact persons.
5. All policies, procedures, guidelines and codes adopted by the Board under
the 1940 Act or any regulation thereunder, including:
o Rule 2a-7 (if the Portfolio holds itself out as a "money market
fund"),
o Rule 10f-3 (relating to affiliated underwriting syndicates),
o Rule 17a-7 (relating to interfund transactions),
o Rule 17e-1 (relating to transactions with affiliated Brokers),
o Rule 17f-4 (relating to securities held in securities depositories),
o Rule 17j-1 (relating to a code of ethics), and
o Rule 17f-5 (relating to foreign custody).
6. All SEC exemptive orders applicable to the Portfolio, and all procedures
and guidelines adopted by the Board under the terms of such orders.
7. All procedures and guidelines adopted by the Board or the Manager
regarding:
o Repurchase agreements,
o Evaluating the liquidity of securities, include restricted securities,
municipal leases and stripped U.S. government securities,
o Segregation of liquid assets in connection with reverse repurchase
agreements, firm commitments, standby commitments, short sales,
options and futures agreements,
o Derivative contracts and securities, and
o Affiliated bank procedures.
8. Any master agreements that the Trust has entered into on behalf of the
Portfolio, including:
o Master Repurchase Agreement,
o Master Futures and Options Agreements,
o Master Foreign Exchange Netting Agreements, and
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o Master Swap Agreements.
9. Blue Sky undertakings.
10. CFTC Rule 4.5 letter.
11. Schedule of the current year's Board meetings, and the reports needed by
the Board.
12. Pricing and performance calculation entities and contact persons.
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SCHEDULE 3 - SUBADVISER DOCUMENTATION
1. Part II of FIM's Form ADV most recently filed with the SEC.
2. Procedures and checklists required by the following exemptive rules and
orders under under the 1940 Act:
o Rule 10f-3 (relating to affiliated underwriting syndicates),
o Rule 17a-7 (relating to interfund transactions),
o Rule 17e-1 (relating to transactions with affiliated Brokers),
o Rule 17f-4 (relating to securities held in securities depositories),
o Rule 17j-1 (relating to a code of ethics),
o Release No. IC-22903 (granting an exemption for the use of "core
funds"),
o Release No. IC-22313 (granting an exemption for the purchase of
affiliated money market funds)
o Release Nos. IC-16602 and IC-19816 (granting an exemption for
certain transactions with affiliated banks), and
o Release No. IC-15243 (granting an exemption permitting the purchase
of insurance from an affiliate and the settlement of claims
therefrom).
3. Procedures and checklist required
4. All exemptive orders granted by the SEC that will become applicable to
the Portfolio, and the procedures and guidelines followed by FIM in
accordance therewith.
